Agenda item

PFI update

Minutes:

It was explained that a report in March 2018 had given welcome clarity regarding PFI payments made though the Schools and High Needs Blocks. It had been acknowledged that the Schools Block had contributed just under £300,000 per annum over a period of approximately six years and that a charge of approximately £184,000 per annum had also been made to the High Needs Block over the same period. The reasons for the High Needs Block charge were not properly known.  In March 2018, Schools Forum had agreed to continue both payments for 2018/19 and to reconsider for 2019/20.

 

Nic Barani explained he had been working closely with colleagues on this long-standing issue: it was felt good progress had been made and was near closure.  A verbal update would be given at this meeting and a follow up paper could be provided, if required. 

 

Nic Barani explained that the PFI factor for 2019/20 had been fully funded by the DfE so there would be no need for a contribution or top slice.  A paper was tabled showing a breakdown of the DSG settlement and, in answer to a query, it was confirmed that it showed the factor being accounted for. However, it was noted that the ESFA was reviewing the premises factor in the DSG allocation and the Council did not know what would be funded in future years. 

 

It was noted that the Chair and Maggie Waller (as previous Chair) had met with Nic Barani to discuss this issue.  Maggie Waller explained it had been hoped the National Funding Formula (NFF) would separate the PFI contribution: the DfE’s funding of the PFI factor was good news for schools and for the Council, but there had always been an awareness the ESFA did not know how to manage the premises factor and how long they would provide support for actual historic spend. If this (the DfE’s funding of the PFI factor) was to change, it had to be remembered this was a Council contribution being made towards a Council contract.  A commitment was therefore requested from the Council that no assumption would be made that it was the responsibility of schools to pick up the funding of the PFI factor. 

 

Neil Wilcox said that the Council’s contribution to the affordability gap was too much, but agreed that Nic Barani had done some very good work around this issue.  Neil Wilcox added that he had never seen any written evidence of the Council’s commitment, despite the Council searching through associated correspondence and that clear evidence was required.  Maggie Waller confirmed that she had supporting written paperwork from 2005 onwards, including references within SBC Cabinet and Committee meetings which she would be willing to share with Neil Wilcox outside the meeting. Maggie Waller added that, on a moral level, this was a Council contract which it should not be the requirement of schools to pick up.  At the time, PFI had been the only option; it was undisputed that the Council had taken the risk, however there had never been a commitment from the schools to build the three PFI schools.

 

It was pointed out there had effectively been a top slice to Schools Block over the past 6 years which Schools Forum should have been asked to approve, and reassurance was required that the Council would follow due process in the future. 

 

It was queried that as the £500,000 Council contribution would not come into Schools Block in 2019/20, would £300,000 also no longer go into the High Needs Block. Nic Barani confirmed that the commitment to this contribution was still there.  Maggie Waller added that at the time of the PFI contract being put in place the financial advice provided had been to put the figures through the DSG:  if the £300,000 came in and went out of the HNB, it would be less complicated.

 

Neil Sykes asked if the funding from the DfE would have any impact on a school converting to academy status.  Nic Barani said not, it was applicable to mainstream schools only.

 

It was noted that Schools Forum had agreed to take on the £184,000 charge to the High Needs Block for 2018/19 only. It was understood the High Needs Block had been charged for the past 6 years.  The Council had 2 proposals on how that would be treated for future years.

 

In answer to a question, Neil Wilcox said that the £184,000 been used for benchmarking costs.  Maggie Waller said as far as she was aware, this was the first time the term had been used; Schools Forum had assumed from information provided the previous year it had originally been used to further fund the unitary charge, but this was the first time that using it for benchmarking has been mentioned. It was felt there had to be debate as to whether this sum should come out of the High Needs Block at all.  Neil Wilcox confirmed the Council was trying to find clarity and it was ‘messy’ –The Chair pointed out that Schools Forum needed to know what the payment had been for in the first place. Maggie Waller added that benchmarking costs were a Council contract cost. It should not be charged to the High Needs Block which, in the main, provided direct provision for children with additional needs and was hugely in deficit. 

 

The Chair outlined that in 2012/13 the Council had approached Schools Forum for a contribution of around £180,000, which it was believed related to these charges.  Schools Forum had rejected the request and asked for a further proposal to be brought back - this had never been forthcoming.  It was likely that the changes in Council personnel had not helped in this matter, but it appeared the charge had subsequently been made without any further consultation.

 

Maggie Waller expressed her thanks to Nic Barani and George Grant (previously SBC) for all their work on this issue and offered to be involved in any further discussions.

 

Neil Wilcox explained that the Council’s David Johnson was taking legal advice on whether this charge could be passed to the PFI schools.

 

Jo Rockall expressed grave concerns about the potential conflict of interest with David Johnson. Neil Wilcox explained it was not David Johnson who was being instructed to give the advice; however members queried whether it should be David Johnson who was seeking the advice, pointing out this did not show impartiality to schools. Another member asked that the Council share the details of the legal advice they were seeking with the PFI schools involved.

 

Maggie Waller asked what would happen to the proposed £184,000 charge for 2019/20. Nic Barani explained it was a charge the Council would put through but suggested it be held back.  Neil Wilcox acknowledged that mistakes had been made in the past.  Confirmation was therefore requested that the £184,000 would not be charged to the High Needs Block and this was agreed by Neil Wilcox. The £309,000 would now remain in General Fund to pay the contribution, without it coming in to the High Needs Block which would be more straightforward. It was further agreed that a paper would be presented to Schools Forum in July 2019, to be informed by further discussions about whether this charge should be paid by schools or from Council funds.  Neil Sykes requested that any consultation be made with schools collectively rather than individually.

 

Neil Wilcox added that the Council was reviewing the High Needs Block and looking at possible Section 106 funding as to whether any of that funding could be allocated into the High Needs Block.